Analysts were largely pleased with CEO Mark Zuckerberg’s focus on stabilizing profit margins as well as plans for greater monetization of its Messenger, WhatsApp and Instagram platforms despite some concerns around the company’s user engagement.

RBC Capital Markets analyst Mark Mahaney, for example, reiterated his outperform rating on Facebook shares and called the company “the best risk-reward in large-cap internet.”

“Monetization of core Facebook and Instagram assets still has material upside potential and Messenger and WhatsApp are beginning early stages of monetization,” the analyst wrote. “Even under pressure, Facebook’s producing impressive growth.”

Here’s a wrap of all the major analyst opinions.

“We are more positive on Facebook coming out of 3Q earnings and are once again adding it to the J.P. Morgan US Equity Analyst Focus List as a value pick. We recognize that concerns will remain around engagement and shifting social behavior, but we view the 2 billion+ user base as stickier than many believe, and Facebook is both adapting to and shaping user behavior. We continue to model revenue deceleration, but we believe it is manageable, particularly as Facebook continues to improve ad products and drive strong return on investment, and as marketers do not have good alternatives to Facebook’s scale and returns.”

“In-line quarter with Facebook users better than expected. Revenue at $13.7 billion slightly missed the Street at $13.8 billion, but was in-line excluding foreign exchange, operating profit was in-line and GAAP earnings per share of $1.76 was above the Street at $1.47 on lower taxes. Ex-FX ad revenue growth was 35 percent year over year, down versus 38 percent in the second quarter of 2018, which we see as well managed deceleration. Daily active user (DAU) growth was 9 percent, slightly below the 10 percent expected in the model, but would have slightly beat excluding calculation methodology change. Overall, a solid quarter given usage and revenue concerns.”

“Facebook’s third-quarter results highlight how Facebook’s engagement continues to transition toward lower-monetizing interactions…namely Stories, messaging, Instagram Explore (now a surprising 20 percent of time spent on Instagram), and video. This is creating some near-term monetization headwinds — with Stories monetizing at an estimated approximate 30 percent lower rate than News Feed, messaging/video monetization still de minimis and Instagram Explore still without any ads.”

“Arguably the best risk-reward in Large Cap Internet, in our view. We remain bullish on Facebook: 1. Facebook stills owns two of the largest media assets in the world (Facebook and Instagram) and the two largest messaging assets in the world (Messenger & WhatsApp); 2. Our checks and management commentary suggest no material change in Marketer views of the attractiveness of Facebook platforms; 3. Monetization of core Facebook and Instagram assets still has material upside potential and Messenger and WhatsApp are beginning early stages of monetization; 4. Facebook’s aggressive investments are improving platform security and creating future revenue streams; 5. Even under pressure, Facebook’s producing impressive growth.”

“While total revenues, monthly active users and adjusted EBITDA were a rounding-error below forecasts, advertising revenues growth of 35 percent foreign-exchange neutral was in-line with expectations, capex came in below estimates, fourth-quarter revenue guidance was revised slightly higher, calendar 2018 opex and capex guidance was revised slightly lower, buybacks were significantly higher, and the low-end of calendar year 2019 opex guidance was in-line w/ expectations. Management’s lack of 2019 revenue guidance may also imply they are comfortable with expectations. That said, 2019 could still be a transition year with revenue growth headwinds from Stories transition and more saturated developed markets combined with expense growth that may not peak until mid-2019.”

“Facebook remains a business in transition as we move from a focus on fiscal year 2018 operating performance to fiscal year 2019. Specifically, initial fiscal 2019 guidance points to another year of heavy investments that will place pressure on Facebook’s ability to grow earnings per share and free cash flow going forward. Commentary for fourth-quarter 2018 revenue deceleration largely mirrored the commentary from the last earnings report but still points to an open debate over fiscal 2019 ad revenue growth with a transition away from NewsFeed to Stories & Video, upside optionality around messaging apps (Messenger & WhatsApp) and user/product changes causing some ad headwinds. We reiterate our Neutral rating and our $160 PT as we look to our industry/fundamental work to gain greater clarity on the topline and user/engagement transition at Facebook.”

“We would be buyers of Facebook shares following third-quarter results and see Street estimates appropriately reset, allowing the narrative to shift towards stabilization at core Facebook, potential re-acceleration from Stories usage and monetization, early ramping in messenger monetization, and a path towards margin stability exiting 2019. The key takeaways from the quarter in our view were (1) Stories seems to be a net positive on engagement, not purely cannibalistic, (2) Zuckerberg acknowledged the importance of margins and Facebook sees margins stabilizing after 2019, (3) the fourth-quarter revenue outlook improved moderately and the lack of comments aimed at 2019 revenue suggests a comfort with Street models here.”

“With management offering updated fourth-quarter 2018 revenue and initial 2019 OpEx and CapEx guidance, we expect estimates to be rightsized for Facebook to return to a path of delivering upside and for Facebook shares to begin the troughing process. We have increased our fourth-quarter 2018 revenue assumptions as we were modeling a higher FX headwind previously. Our price target remains the same at $210 and we maintain our Outperform rating as our thesis remains: 1) Facebook will be able to drive long term revenue growth without a material lift in ad loads, 2) Street models continue to underestimate the long-term monetization potential of upcoming new products, 3) optionality/upward bias to estimates from multiple other products (Messenger and WhatsApp).”

“We remain Buy rated and maintain our 12-month price target of $205. At about $142, Facebook trades at 18 times and 16 times our calendar year 2019 and calendar year 20 GAAP earnings per share estimates of $7.95 and $8.63. Our price target is based on an equal-weighted blend of DCF (terminal FCF multiple of 15X), EV/EBITDA (16X CY19E), and P/E (25X CY19E). Risks to our investment thesis include worsening macro, user fatigue, and impact from privacy concerns/GDPR.”

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